A recent study from the University of Auckland reveals that female employees who have access to family leave policies suffer the most during economic downturns.

Surprisingly, mandating companies to provide leave for employees, especially new parents, could exacerbate gender inequality when economic conditions become challenging.

The study delves into the effects of the US Family and Medical Leave Act on gender dynamics within companies during periods of economic contraction.

Gender norms

“The crux of the paper is about gender norms. It argues that gender norms can determine how employer responses to negative economic shocks produce poorer outcomes for women in the workforce,” the researchers explain.

The study zeroed in on the three years following China’s accession to the World Trade Organization. During this time, there was a notable surge in import competition. The researchers discovered that this increase in competition led to a decline in the proportion of female employees, their earnings, and their chances of advancement within companies obliged to provide family leave benefits (those with over 50 employees), compared to those not mandated to do so.

This negative impact was particularly pronounced among women of childbearing age who did not hold a college degree, especially within companies helmed exclusively by men.

“Our study highlights a concerning issue: laws designed to protect jobs during periods of leave (such as time taken to look after children) may exacerbate gender inequality in challenging economic times,” the researchers explain. “Companies need to think about how they can ensure their family leave policies and beliefs about gender roles don’t result in limiting women’s employment options and potential for progression.”

Replacement costs

The US Family and Medical Leave Act, offering unpaid leave, differs from policies in countries like New Zealand where employees receive paid parental leave. However, across the board, employers incur costs to replace workers on leave, covering expenses for advertising, hiring, and training replacements.

There’s a perception among some employers that women are more likely to take leave under family leave programs, which holds some truth. However, this belief might lead to reduced investment in women, assuming they may prioritize family over work at some point. Consequently, this lack of investment could result in lower productivity, leading to reduced employment opportunities, earnings, and promotions for women.

“This highlights a way forward in terms of encouraging more women into senior management roles, because it does seem like these beliefs about gender roles may be less adhered to by women,” the researchers explain.